Key mass market retailers turned in healthy same-store sales gains for May, though some leading drug store chains continued to see disappointing comparable sales results.

same-store sales, May, mass market retailers, comparable-store sales, comp-store sales, Russell Redman, warehouse club, discount store, drug store, Costco, BJ's Wholesale Club, Target, Family Dollar, Fred's, Duckwall-ALCO, Walgreens, Rite Aid, Gregg Steinhafel, Bruce Efird, Rich Wilson, Mark Miller, William Blair & Co.

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May brings good sales news for mass chains

June 3rd, 2010

NEW YORK – Key mass market retailers turned in healthy same-store sales gains for May, though some leading drug store chains continued to see disappointing comparable sales results.

Major chains reporting monthly results Thursday also recorded solid increases in total revenue.

"Overall, May sales for most of the broadline retailers we cover were in line with or slightly better than our and [Wall] Street expectations, while the drug retailers reported softer-than-expected results," William Blair & Co. analyst Mark Miller wrote in a research note on May retail sales.

Costco Wholesale Corp. said its overall comparable-store sales surged 9% for the four weeks ended May 30, reflecting a 7% rise at its U.S. warehouse clubs and a 17% jump in its international stores. Excluding the effects of gas inflation and currency exchange, total same-store results in May rose 5%, including a 5% gain in the United States and a 9% increase internationally. Costco's overall revenue advanced 11% to $6.09 billion for the month.

Rival BJ's Wholesale Club Inc. also posted positive results. Its comparable-club sales climbed 3.5% for the four weeks ended May 29, and excluding fuel business the same-store gain was 6.8%, the retailer said. Total sales in May jumped 11.3% to $871.9 million.

Deep discount chain Family Dollar Stores Inc., too, turned in a robust performance. The retailer said Thursday that same-store sales were up 7% for its third quarter ended May 30, with seasonal and consumables categories especially strong. Overall revenue rose 8.4% to nearly $2 billion in the quarter. 

Discounter Target Corp. was on the upside in May, but chairman and chief executive officer Gregg Steinhafel stated that "May comparable-store sales were somewhat below our expectation." Target said comp-store sales edged up 1.3% for the month, while total revenue increased 3.7% to $4.62 billion for the four weeks ended May 29.

Fred's Inc. said it saw improved results as well in May. The discount general merchandise chain reported a 3.5% rise in same-store sales for the month, compared with a 0.2% uptick a year earlier, and a 5% gain in overall sales. CEO Bruce Efird noted that May comp-store results "came in at the upper end of our expectations."

Drug store chains Walgreen Co. and Rite Aid Corp., meanwhile, didn't fare so well on the same-store front.

Walgreens said comparable-store sales in May — which don't include the recently acquired Duane Reade stores — dipped 0.2% year over year, the same decrease it reported for April. Yet total sales climbed a healthy 5.9% to $5.7 billion in May, with Duane Reade stores contributing 2.9 percentage points to the monthly increase, according to the retailer.

At Rite Aid, same-store sales declined 1.7% decline for the five weeks ended May 29, down from a 1% drop-off in April. The chain said overall drug store revenue for May fell 2.7% to about $2.44 billion.

Also on the downside for May was regional broadline retailer Duckwall-ALCO Stores Inc., which caters to smaller, underserved communities. The chain said same-store sales sank 9% in the month, while sales from continuing operations for the four weeks ended May 30 dropped 7.5% to $39.2 million. Cooler temperatures and heavy rain in Duckwall-ALCO's largest markets contributed to the declines, according to CEO Rich Wilson.